Vehicle Demand in a Time of Disruption
Revisiting the statistics to project second-quarter sales targets.
Economy woes are on the minds of every business right now, and sales projections are likely to be disrupted. If you are trying to make sense of what the second quarter may look like at your dealership, we dug into a few sources to pull together some quick stats on the average demand for vehicles in the U.S. to help you make some mathematical assumptions. Regardless of what the economy does, there are leases that will get traded in, and cars will get totaled and require replacement.
J.D. Power studies indicate that over 1.8 million vehicle leases will expire between March and July 2020. This, of course, means that 1.8 million consumers will need to visit their local dealership to either extend their lease, buyback that leased vehicle or return their vehicle and choose a new vehicle.
Truck and SUV Sales
Even though new vehicle sales are in a downward trend, in 2019, over 46,800 light-duty vehicles were sold each day. That 1.7 Million sales in a year sold across 18,000 dealerships in the U.S.
Does your dealership offer “bird dog” payments to Body shop owners and estimators? You should. According to a recent report from CCC (a collision repair management system), each day, roughly 34,400 vehicles are totaled and head to salvage yards. These vehicles are leaving the U.S. fleet and need to be replaced by new or used vehicles sitting on dealership lots.
As cars and trucks continue to hit the nation’s fleet with full ADAS capability, the cost to repair is pushing more and more vehicles to totaled that could physically be repaired but is not economically feasible. If a car is hit hard enough in the front and the airbags blow, they are getting totaled now. In the past, these “trainwrecks” were often repaired, but not anymore because of the cost for ADAS parts and post-repair scanning.
Last-Mile Fleet And Heavy Truck
Supply chain and transportation are an area for growth given the rise of Amazon and nearly same-day deliveries replacing the need for brick and mortar stores. And now, there is a demand for medical supplies, food, and personal consumer products as people can’t leave their houses.
Last-mile fleet businesses continue to rise, and sprinter vans high roof delivery trucks are more vital than ever. With an increase in demand, commercial fleet operators may decide that now is the right time to add a new vehicle to help meet this demand. Amazon continues to add last-mile depots in cities to reduce shipping times, and incentives exist for entrepreneurs to start their own transportation and logistics companies. This will be an attractive option for some of the thousands of Americans who may be laid off as a result of the virus.
All is not lost for dealerships in 2020. The new car sales have been in decline, and the shutdowns at factories may help the right size supply and demand. But auction sales are increasing and pre-virus, the demand was steadily outpacing the supply. Certainly, there will be fewer buyers in the days ahead, but focus on the areas of growth as outlined above and adjust your sales strategies accordingly.